Six Flags Rides Higher on Key Analyst Update

To reflect a greater mix of season pass attendance, Oppenheimer adjusted its model slightly. The firm lowered its third-quarter admissions per cap estimate and slightly increased its third quarter in-park spend per cap estimate. Oppenheimer believes Six Flags remains on track to achieve its Project 500 target of $500 million of modified EBITDA in 2015. As a result, Oppenheimer maintained an Outperform rating with a $56 price target, implying upside of 25% from current prices.

At the same time, the brokerage firm adjusted its third-quarter and full-year revenue estimates to $557 million and $1.214 billion, from $568 million and $1.225 billion, respectively. Oppenheimer adjusted its third-quarter admission per cap estimate to $25.86 from $26.51, owing to higher season pass mix. However, the firm increased its third-quarter in-park spend per cap estimate to $17.92 from $17.83, as certain initiatives such as all-season dining more than offset the deflationary impact of greater season pass attendance.

Oppenheimer expects that Six Flags can grow its third-quarter and full-year revenue by 2.9% and 3.3%, respectively, on the back of increased attendance from season pass and membership holders. In fact, the company reported a 32% year-over-year increase in the Active Pass Base at the end of June. This growth is consistent with management’s strategy to upsell guests to multi-visit passes as these guests generate higher revenue and cash flow (on a full-year basis) and provide a hedge against inclement weather.

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In its report, Oppenheimer finished it off by saying:

We continue to believe Six Flags will meet its Project 500 target of $500 million of modified EBITDA in 2015. Our 2015E modified/adjusted EBITDA are reduced to $502 million/$458 million, from $513 million/$469 million. Our 2016E is unchanged. Maintain Outperform and $56 price target.

Shares of Six Flags were up 1.1% at $44.85 on Thursday afternoon. The stock has a consensus analyst price target of $54.50 and a 52-week trading range of $31.77 to $51.09.